With next week’s Budget threatening to overshadow even the RBA’s rate decision, Treasurer Chalmers is expected to offer a golden handshake to many public servants. Labor’s hiring binge added 41,000 public servants in four years, so will enough of them take the offering?
It’s the Budget next Tuesday, and it’s bound to grab greater headlines than the RBA decision tomorrow on rates, which the majority of economists are tipping will be another 0.25%, despite all central banks around the world being on hold because of a serious problem called the Iran war. And one big headline from next week’s fiscal show-and-tell from Treasurer Chalmers will be how many public servants he can lose!
No, he’s not sacking but he’s expected to offer incentives to a large group of new government workers, which Labor has built up since 2022 when it took over the running of the country.
The AFR’s economics editor, John Kehoe, says voluntary redundancies are to be offered for the 200,000 plus public servants, “after Labor went on a hiring spree that threatens to blow out the federal budget’s $31 billion wages bill.”
Here are the facts or leaks from this pre-Budget story:
- Public servants on $100,000 plus a year will be targeted to go.
- They would get a six-figure payout to leave.
- The public servants payroll has grown by 41,000 to 213,000 in the four years under Labor.
- The Government needs to lose 28,000 workers to meet the forecasted public sector wage bill.
- To keep the current workforce, the Parliamentary Budget Office says the Government would have to find $11.8 billion in savings over that four-year period.
This story is interesting, as Kehoe pointed out that “Labor criticised the plan that then-opposition leader Peter Dutton took to the 2025 election to slash 36,000 public servants.”
While Kehoe surveyed a host of departments and government agencies that house public servants, I loved this response from the Department of Climate Change and Energy: “These voluntary redundancies will only proceed by mutual agreement and apply only where a role is impacted by budget or changing priorities, it no longer contributes to departmental outcomes as effectively as it could, or a staffing misalignment exists.”
That spokesman has watched a lot of that old TV show — Yes Minister! And this raises the question: The exit door might get opened but will many public servants go through it?
One final point on tomorrow’s RBA decision, if the Iran war was over and Donald Trump wasn’t still sceptical about Iran’s latest 14-point proposal for peace, I can see that the central bank board could focus on our locally too-high inflation and raise rates. However, the war isn’t over, and oil prices will remain elevated, so the threat of a recession can’t be ruled out.
On top of that, Australians have copped two rate rises over February and March and the petrol price rises are akin to one or two hikes in rates on household budgets.
These help lower demand and pricing pressures, while another rate rise would add to inflation via the higher costs for landlords and business owners, who would pass it on with higher rents and prices for goods and services delivered.
While the RBA should ‘hold’ on rates, history tells me that they will disappoint me, again, because these people at the RBA never say sorry when they get it wrong.
As one of Mel Brooks’ characters once said: “It’s good to be king.”
